United States

Department

of Agriculture

www.ers.usda.gov

Electronic Outlook Report from the Economic Research Service

LDP-M-96-01

June 2002

World Events Frame Outlook

for Livestock, Dairy, and

Poultry

Abstract

In 2001, U.S. red meat and poultry production stabilized as lower beef production was

partially offset by higher pork and poultry production. In 2002, slightly larger projected

growth in meat production (2 percent) and lower exports are expected to result in lower

wholesale prices for cattle, hogs, and poultry. Recovery in milk per cow is expected to

override declining milk cow numbers and boost 2002 milk production by 2 to 3 percent.

This report examines changes in the livestock, dairy, and poultry industry in 2001 and

provides initial assessments of 2002 based on forecasts from the June 2002 World

Agricultural Supply and Demand Estimates. Readers who would like more detail should

refer to the Livestock, Dairy, and Poultry Situation and Outlook (LDP) monthly newsletter that provides timely livestock, dairy, and poultry information, focusing on current

production, price, and trade statistics for each of the sectors.

Keywords: Outlook, livestock, red meat, dairy, poultry.

Acknowledgments

The coordinator would like to acknowledge Joy Harwood, Janet Perry, Dennis Shields,

Leland Southard, and Dale Simms for their helpful suggestions and comments during

the preparation of this article, as well as Shayle D. Shagam, Joel L. Greene, Milton

Madison, and Tim Rocke for their comments and reviews. Appreciation also is extended

to James Miller, Ron Gustafson, William Hahn, David Harvey, Annette Clauson,

Mildred Haley, Keithly Jones and Dale Leuck for their keen insights. Thanks also to

Wynnice Pointer-Napper for her technical assistance.

Delmy L. Salin, Coordinator (dsalin@ers.usda.gov)
The U.S. economy began to weaken in March 2001, and

was further buffeted by the events of September 11.

These events resulted in a shift in consumer preferences

away from restaurants, which demand high-quality 

cuts of meat, toward eat-at-home or take-out-food.

Underscoring this trend, food-away-from-home expenditures shifted in the second half of 2001 from full-service

meals and snacks (restaurants) to limited-service meals

and snacks (fast food places). 

In 2001, lower beef production was partially offset by

higher pork and poultry production.1 U.S. per capita

meat consumption declined to 213.3 pounds in 2001.

Total meat exports reached a record 10.1 billion

pounds in 2001, up nearly 8 percent over 2000. 

In 2002, slightly larger projected growth in meat production (2 percent) and sharply lower exports are

expected to result in lower wholesale prices for cattle,

hogs, and poultry. Total red meat and poultry exports

in 2002 are expected to decrease 7 percent due largely

to a strong dollar, worldwide economic weakness, animal disease concerns, and increased competition from

other countries. Due to recent bans of U.S. poultry

exports by Russia, Japan, Ukraine, Mexico, and the

Philippines, total poultry exports are forecast to

decline 11 percent in 2002, reversing steady growth

since 1999.

Milk production slipped 1 percent in 2001, a result of

slightly lower milk cow numbers and the unfavorable

effects of weather and forage on output per cow.

Lower returns and the continued tight heifer and hay

markets will override expansion pressures and bring

milk cow numbers fractionally lower in 2002.

Recovery in milk per cow is expected to outweigh

declining milk cow numbers and boost 2002 milk production 2 to 3 percent. Farm milk prices are expected

to drop more than $2 per cwt in 2002 as a result of this

increase in supply and somewhat weaker demand.

2 Economic Research Service, USDA

Summary

1 This report examines changes in the livestock, dairy and poultry

industry in 2001 and provides initial assessments of 2002 based on

forecast from the June 2002 World Agricultural Supply and

Demand Estimates. Readers who would like more detail should

refer to the Livestock, Dairy, and Poultry Situation and Outlook

(LDP) monthly newsletter that provides timely livestock, dairy and

poultry information, focusing on current production, price, and

trade statistics for each of the sectors.
Commercial beef production in 2001 totaled 26.1 billion pounds, down 2.5 percent from 2000 (fig. 1).

Extreme weather in 2001—severe winter weather early

in the year and drought in the second half—in many

areas reduced herds despite stronger feeder cattle

prices, low grain prices, and positive cow-calf returns

above cash costs. All this marked 2001 as the sixth

year of the downturn in the cattle cycle (fig. 2). In

2002, beef production will likely increase slightly as

carcass weights average higher and dry weather again

causes producers to delay heifer retention, preventing

feedlot placements from dropping substantially. Heifer

retention and herd expansion will depend on the availability of forage and water supplies throughout 2002.

Reduced beef supply and severe winter weather supported cattle prices in 2001. Consequently, fed cattle

prices were strong in 2001, averaging $72.71 per hundredweight (cwt), up 4 percent from a year earlier.

Feeder cattle prices increased 2 percent compared with

2000, averaging $88.20 per cwt, and cow prices

increased to $44.39 per cwt. However, heavy carcass

weights, increasing imports, and continued heavy

placements of heifers in feedlots are moderating cattle

prices in 2002. Fed cattle prices are forecast to decline

to the high-$60s in 2002.

Composite retail prices for Choice beef averaged a

record $3.38 a pound in 2001, up 31 cents from a year

earlier (fig. 3). A drop in beef supplies led to record

retail prices, especially for high-quality beef cuts,

through early summer. The rise in retail Choice beef

prices widened the farm-to-retail price spread to $1.83

per pound, an increase of 26 cents per pound compared with 2000. Even though the net farm value rose

by just over 5 cents in 2001, the farmer’s share of the

retail price of a pound of Choice beef declined from

48.6 percent to 45.8 percent because retail prices rose

faster than farm prices. Per capita beef consumption

declined over 1 pound in 2001 and is expected to rise

marginally in 2002. 

Lower domestic supplies, a strong U.S. dollar, high

U.S. beef prices, bovine spongiform encephalopathy

(BSE) in Japan, and slowdown in the world economy

reduced U.S. beef exports by 8 percent in 2001. Total

U.S. beef exports are expected to rise only slightly in

2002 as U.S. prices are expected to continue high and

worldwide economic growth is expected to remain

sluggish. Japan, the largest importer of U.S. beef,

accounted for 44 percent of total U.S. beef exports in

2001. Japanese beef consumption declined in 2001,

Economic Research Service, USDA 3

Beef: Record Prices and Lower Exports in 2001; 

Lower Prices in 2002

Figure 1

Production of most animal products 

up in 2001

% change in U.S. production from previous year

2001

2002

2002 forecast.

Source: June World Agricultural Supply and 

Demand Estimates, USDA.

01 23

Beef

Milk

Pork

Broilers

Turkeys

Eggs

Lamb & mutton

-4 -3 -2 -1 4

Figure 2

2001 marked the sixth year of declining U.S.

cattle inventory, January 1, 1980-2002

Mil. head

Beef production

Cattle inventory

2002 forecast.

Source: June World Agricultural Supply and Demand 

Estimates, Cattle, USDA.

1980 83 86 89 92 95 98 2001

90

95

100

105

110

115

120

15

18

21

24

27

30

Bil. lb
especially after the discovery of BSE in early

September. The recovery of the Japanese beef market

in 2002 will largely depend upon restoring consumer

confidence in the meat market. 

Mexico is the second largest market, accounting for 23

percent of total U.S. beef exports by volume in 2001.

Export growth to Mexico slowed from 11 percent in

2000 to only 3 percent in 2001 due to the slowdown in

the Mexican economy. Strong demand in the United

States and drought conditions in both Mexico and

Canada were responsible for an 11-percent increase in

U.S. cattle imports in 2001 and a 7-percent decline in

cattle exports. However, declining inventories in

Mexico, poor forage conditions, and weaker feeder

cattle prices in the United States may dampen Mexican

feeder cattle exports to the U.S. in 2002. More information about Mexican cattle exports to the United

States can be found in Mexican Cattle Exports to U.S.:

Current Perspectives (http://www.ers.usda.gov/publications/AgOutlook/june2001/AO282d.pdf). 

4 Economic Research Service, USDA

Figure 3

Beef prices remain high in 2002 as 

consumption levels off

$/lb

Per capita consumption

Retail price

Annual average retail price. 2002 forecast.

Source: June World Agricultural Supply and Demand 

Estimates, USDA.

Lb/capita

1992 94 96 98 2000 02

2.6

2.7

2.8

2.9

3.0

3.1

3.2

3.3

3.4

3.5

62

64

66

68

70

For more information on the domestic beef sector

contact, Ronald Gustafson, 202-694-5174,

ronaldg@ers.usda.gov; for the international beef 

sector, contact Dale Leuck, 202-694-5186,

djleuck@ers.usda.gov.

New negotiations on trade in agriculture were

recently initiated by the World Trade Organization

(WTO). The negotiations focus on extending the

gains to world trade achieved in the 1994 Uruguay

Round Agreement on Agriculture (URAA), which

limited the use of tariffs and non-tariff barriers,

export subsidies, and the type and level of spending

for domestic support programs. For the beef sector,

the URAA further boosted U.S. and world beef

trade. While export subsidies and nontariff barriers

may continue to limit the market for U.S. beef

exports, obtaining additional increases in market

access in these negotiations may increase U.S. beef

exports. For more information, see The New

Agricultural Trade Negotiations: Background and

Issues for the U.S. Beef Sector by Dale Leuck

(http://www.ers.usda.gov/publications/ldp/dec01/).

The New Agricultural Trade

Negotiations: Background and Issues

for the U.S. Beef Sector
Commercial pork production in 2001 totaled 19.1 

billion pounds, up 1 percent compared with 2000 

(fig. 1). Due in part to large financial losses in 1998

and 1999, the number of sows farrowing declined,

resulting in a smaller pig crop (pigs per litter remained

nearly unchanged). This was more than offset by a rise

in hog imports. As a result, annual slaughter was

unchanged, but a 2-pound increase in the average

dressed weight boosted pork production by 1 percent.

Commercial pork production in 2002 is expected to

increase 3 percent due to a 2-pound increase in

dressed weights and a larger slaughter. Both the pig

crop and hog imports are expected to increase. 

Strong export demand tightened supplies and pushed

hog prices in 2001 up more than $1 from a year earlier, to $45.81 per cwt (fig. 4). Record retail beef prices

helped boost retail pork prices. The farm-to-retail price

spread widened by 9 cents, as net farm value of pork

rose by only 2 cents and retail prices increased by 11

cents. The farmers’ share of the value of a pound of

pork (retail) declined from 31 percent in 2000 to 30

percent in 2001. In the face of higher retail prices, per

capita consumption of pork declined by 1 pound compared with 2000. Hog prices in 2002 are expected to

decline to the mid-$30’s per cwt due to larger pork

production, lower exports, and a greater supply of

competing meats such as poultry and beef.

U.S. pork exports in 2001 reached a record of nearly 1.6

billion pounds, up 21 percent over 2000. This represents

over 8 percent of total U.S. pork production (fig. 5).

Japan is the largest U.S. pork market, accounting for

nearly 48 percent of total U.S. pork exports in 2001.

U.S. exports to Japan rose 28 percent in 2001, to 743.5

million pounds. The increase was likely due in part to

food safety concerns: foot-and-mouth disease (FMD) in

Europe and BSE in Japan caused Japanese consumers to

substitute more U.S. pork into their diets. 

Mexico and Canada imported larger quantities of U.S.

pork as well last year. U.S. pork exports to Mexico,

the second largest U.S. pork market, increased 9 percent in 2001. Mexico represents 20 percent of total

U.S. pork exports. U.S. pork exports to Canada, the

third largest (12 percent) U.S. pork market, increased

34 percent in 2001.

Currently, expectations are for a 5-percent decline in

U.S. pork exports in 2002. Static economic growth in

Japan and increased competition from Canadian pork

products in Mexico are likely to temper demand for

Economic Research Service, USDA 5

Pork: Hog Prices Lower and Demand Weaker for Pork 

Products in 2002

Figure 4

Hog prices expected to fall in 2002

$/cwt

Retail pork prices

Hog prices

2002 forecast.

Source: June World Agricultural Supply and Demand 

Estimates, USDA.

$/lb

1992 94 96 98 2000 02

20

30

40

50

60

0.50

1.00

1.50

2.00

2.50

3.00

Figure 5

Exports of most animal products forecast to

slip as percent of total production in 2002

Percent of total U.S. production

2001

2002

2002 forecast.

Source: June World Agricultural Supply and Demand 

Estimates, USDA.

0 15 5 20 10

Broilers

Turkeys

Eggs

Beef

Pork

Lamb & mutton
U.S. pork. In addition, U.S. pork exports face strong

competition from Brazil in the Russian market. 

Pork imports in 2001 declined nearly 2 percent to 950

million pounds (Canada is the major supplier of live

hogs and pork to the United States). On the other hand,

live hog imports totaled more than 5.3 million hogs, an

increase of about 22 percent over 2000. Feeder pigs

(under 110 pounds) accounted for 59 percent of total

U.S. hog imports. Factors behind the surge include

lower and less volatile U.S. feed costs, greater available

slaughter capacity in the United States, and rapid expansion of the Canadian sector. More information about

financial prospects for hog producers and structural

changes in the hog industry can be found in Financial

Prospects for Hog Producers Generally Favorable by

Southard and Haley (http://www.ers.usda.gov/publications/AgOutlook/sep2001/ao284b.pdf).

6 Economic Research Service, USDA

For more information on the pork sector, contact

Mildred Haley, 202-694-5176, mhaley@ers.usda.gov.
In 2001, the U.S. sheep industry continued its long

decline, marked by lower inventories, prices, and revenues. The industry has been hurt by heightened concerns about sheep-borne animal diseases, as well as

the removal of a tariff-rate quota (TRQ) on imported

lamb meat from Australia and New Zealand. U.S.

commercial production of lamb and mutton in 2001

was 223 million pounds, down 3 percent from 2000

(fig. 1). Large supplies of moderately overweight (less

desirable) lambs kept prices relatively low, averaging

$72.04 per cwt in 2001, down 9 percent from a year

earlier. Lamb prices are expected to continue to

decline—12 percent in 2002—due to increased competition from Australia and New Zealand (fig. 6).

Lamb and mutton imports increased by 12 percent in

2001, offsetting the decrease in domestic supply. U.S.

lamb and mutton imports totaled 146 million pounds

in 2001. Australia and New Zealand provided 99 percent of all U.S. imports. Their smaller, grass-fed animals have found favorable consumer acceptance in the

United States. A TRQ was in effect for 10 months in

2001, but imports were still higher than previous

years. Weak Australian and New Zealand currencies

along with demand for imported lamb largely offset

the effects of tariffs. On November 15, 2001, the

United States acted to comply with the World Trade

Organization (WTO) ruling by removing tariffs on

Australian and New Zealand lamb. 

To support the industry, the USDA’s Lamb Meat

Adjustment Program was extended through July 31,

2003, with an additional $37.7 million in Federal

aid. Of that, $26 million will be allocated to purchase or retain ewe lambs, while the remainder will

be restricted to direct payments to producers for

slaughter and feeder lambs. On April 8, 2002,

USDA’s Agricultural Marketing Service (AMS)

issued a final rule on the establishment of a national

industry-funded Lamb Promotion, Research, and

Information Order. This program is designed to

increase the demand for lamb and lamb products. In

addition, the Farm Security and Rural Investment

Act of 2002 contains nonrecourse marketing assistance loan provisions for wool and mohair.

Economic Research Service, USDA 7

Sheep: Imports Up, Production and Prices Down in 2002 

Figure 6

Lamb prices fall amid increasing imports and declining production

Mil. lb

Production Imports

2002 forecast.

Source: Economic Research Service, USDA.

1975 77 79 81 83 85 87 89 91 93 95 97 99 2001

0

100

200

300

400

500

0

20

40

60

80

100

$/cwt

Price

For more information on the sheep industry, contact

Keithly Jones, 202-694-5172, kjones@ers.usda.gov.
Moderate dairy farm exits (the result of low 2000

returns) and tight supplies of replacement heifers and

high quality forage resulted in a slight decline in milk

cow numbers in 2001. With milk per cow battered by

weather and forage conditions, milk production also

slipped. Milk production declined to 165.3 billion

pounds, down 1.3 percent from 2000 (fig. 1). Cow

numbers were down 1 percent, while milk per cow

was virtually the same. Milk cow numbers are expected to decline fractionally in 2002 due to lower returns

and continued tight heifer and hay markets. However,

recovery in milk per cow is expected to boost 2002

milk production 2 to 3 percent (fig. 7).

Strong demand for dairy products and a slight decline

in production in 2001 resulted in the highest farm milk

price since 1998. The average farm milk price for

2001 was $15.05 per cwt, up 21 percent from the previous year (fig. 8). Farm milk prices in 2002 are

expected to drop more than $2 per cwt. The retail price

index for all dairy products (measured by the Bureau

of Labor Statistics) increased 4 percent in 2001, and is

expected to increase 1 to 2 percent in 2002. 

Commercial use of milkfat and skim solids in 2001

reached record levels, the equivalent of 169.4 billion

pounds of milk on a milkfat basis and 163.7 billion

pounds on a skim-solids basis. Commercial use of butter was unchanged, even though prices jumped enough

to draw in substantial imports over tariff-rate-quotas

(TRQ). Commercial use of cheese increased by 1 percent despite a 25-percent increase in prices. While

demand for butter and cheese grew, demand for fluid

milk, ice cream, and most other perishable manufactured products declined slightly. 

Reduced production as well as increased domestic use

and commercial exports resulted in smaller price support purchases of nonfat dry milk in 2001. Removals

under the Dairy Export Incentive Program (DEIP)

8 Economic Research Service, USDA

Dairy: 2001 Dairy Prices Soar as Milk Output Slips; 

Reversal Seen in 2002

Figure 7

Milk production to bounce back in 2002

Bil. lbs

2002 forecast.

Source: June World Agricultural Supply and Demand 

Estimates, USDA.

1992 94 96 98 2000 02

145

150

155

160

165

170

175

180

Recovery in milk production in 2001 continued to

be limited by the inability of replacement heifer

supplies to keep up with rising demand. Record

heifer prices prevailed despite relatively large supplies of replacement heifers. The January 1 inventory showed a record 44.6 dairy replacements (500

pounds and over) per 100 milk cows. But culling

rates have increased to the extent that these supplies

were insufficient to replace the culls and provide

heifers for expanding farms.

The heifer situation affected milk cow numbers by

discouraging expansions and delaying full use of

currently existing capacity. However, the effect on

cow numbers has been mitigated by two factors:

(1) keeping some cows that normally would been

culled from continuing herds; (2) selling some cows

as replacements, instead of for slaughter, from exiting herds. Unusual retention of inferior cows compromised average milk per cow. For more information, see Dairy Industry in 2002 to Encounter

Uncertain Climate of Demand by James Miller

(http://www.ers.usda.gov/publications/agoutlook/dec

2001/ao287c.pdf).

Heifer Math & the Western 

Dairy Industry
remained about the same. In 2002, government purchases of nonfat dry milk are expected to stay large.

Strong Asian demand and relatively modest export

supplies of nonfat dry milk increased international

prices sharply in late 2000. The strong prices held

through most of 2001. However, rising export supplies

and sluggish import demand dropped prices in late

2001-early 2002. Prices are expected to stay low

through 2002. International butter prices were weak

throughout the period.

Economic Research Service, USDA 9

Figure 8

Farm milk prices to slip in 2002

$/cwt

2002 forecast.

Source: June World Agricultural Supply and Demand 

Estimates, USDA.

1992 94 96 98 2000 02

10

11

12

13

14

15

16

For more information on the dairy industry, contact

James Miller 202-694-5184, jjmiller@ers.usda.gov.
Higher Production and 

Exports in 2001

U.S. poultry (broiler, turkey, and other chicken) production in 2001 reached 36.9 billion pounds on a net

ready-to-cook basis, up 2.4 percent from 2000. While

domestic consumption increased 1 percent over 2000,

exports increased by 12 percent, absorbing the

increased production. Most of the increase was due to

the recovery of exports to Russia.

In 2002, poultry production is expected to grow at

about the same rate as in 2001. In contrast, total poultry exports are forecast to decline 11 percent due to

bans by several countries (Japan, Ukraine, Mexico,

Philippines, and Russia). In addition, U.S. poultry

exports are expected to face increasing competition in

the world market in 2002, especially from Brazil, one

of the lowest cost poultry producers in the world. 

Broilers: Record Exports and Higher

Wholesale Broiler Prices in 2001;

Exports To Slip in 2002

Federally inspected broiler production rose 2.5 percent

in 2001, to 31.3 billion pounds, and is expected to

increase 3 percent in 2002 (fig. 1). In 2001, higher

wholesale broiler prices and continued low feed costs

supported the increase in average bird weights and the

number of broiler chick placements.

Wholesale composite broiler prices increased by 16 percent in 2001, to 62 cents per pound, while composite

retail prices for chicken rose by less than 2 percent, narrowing the wholesale-to-retail price spread by 6 percent

(fig. 9). Since the mid-1990s, foreign demand for dark

meat and boneless meat has increased faster than the

domestic demand for white meat. This has narrowed the

difference between white and dark meat prices. In 2001,

retail breast meat prices declined slightly while leg bonein prices increased by over 3 percent. 

The production increase in 2001 was absorbed by higher exports that consist primarily of dark meat (drumsticks, thighs, deboned leg meat, and leg quarters). Total

U.S. broiler exports2 increased almost 12 percent in

2001. Exports of 5.6 billion pounds accounted for about

18 percent of U.S. broiler production in 2001 (fig. 5).

Exports grew mainly because of the increase in direct

shipments to Russia, which totaled 2.3 billion pounds in

2001 (41 percent of all U.S. broiler exports). Part of the

increase in direct shipments to Russia was due to less

transshipment through both Latvia and Estonia. These

three countries combined represent the largest market

for U.S. broiler exports.

China and Hong Kong combined represent the second

largest market (15 percent) for U.S. broiler exports,

totaling about 858 million pounds in 2001. In 2001,

total broiler exports to Mexico amounted to 381 million pounds, an increase of about 9 percent over 2000,

making it the third largest market for U.S. broiler

exports by volume. Other countries showing considerable growth in U.S. broiler imports were Korea,

Guatemala, Jamaica, Colombia, and Haiti.

Broiler exports are expected to decline nearly 12 percent in 2002. From March 10-April 15, 2002, Russia

imposed a ban on all U.S. poultry products. The

Russian government claimed that poultry products

from U.S. plants were not meeting protocols for

inspection and had tested positive for salmonella.

Although the bans have been lifted, the need for certificates and other delays have slowed the resumption

of exports to Russia.

10 Economic Research Service, USDA

Poultry

Figure 9

Poultry wholesale-to-retail price spreads

Cents/lb

Chickens

Eggs

Source: Economic Research Service, USDA.

Cents/doz.

1993 95 97 99 2001

10

30

50

70

90

110

15

17

19

21

23

25

27

29

31

Turkeys

2 Exports of U.S. broiler meat exclude exports of chicken 

feet (paws), which are not reported in federally inspected 

broiler production. 
Other markets are also being affected by bans. On

January 1, 2002, the Ukraine banned U.S. chicken

imports, citing the use of antibiotics in U.S. broiler

production and antimicrobial rinses in U.S. processing

plants. Because U.S. poultry exports to the Ukraine

varied widely in volume, it is difficult to determine the

impact on trade shipments. In 1999, for example, shipments were over 100 million pounds, but fell to just

over 1 million pounds in 2000. In 2001, shipments

totaled 33 million pounds. 

Japan (the fourth largest market by volume) has enacted a series of bans on imports of poultry products

from specific U.S. States. These bans have been based

on outbreaks of low-pathogenic strains of Avian

Influenza (AI). At different times, bans have been

enacted by at least one country on poultry products

from Pennsylvania, Maine, Virginia, West Virginia,

North Carolina, and Texas.

Turkeys: Exports and Prices 

Decline in 2002

U.S. turkey production in 2001 set a record, totaling

5.6 billion pounds, 3 percent higher than the previous

year due to greater turkey slaughter and heavier average weights (fig. 1). Wholesale whole-bird prices averaged 66.3 cents per pound, down about 6 percent compared with 2000. Retail whole-bird prices rose by 6

percent, widening the wholesale-to-retail price spread

by almost 33 percent over 2000 (fig. 9). Strong production increases in the second half of the year held

down seasonal price increases, resulting in a decline in

2001 wholesale whole-bird prices. Due to the high

capital investment required in growing and processing

turkey products, it takes a big drop in wholesale prices

to create disincentives sufficient for growers to reduce

production. Turkey production is expected to increase

slightly in 2002, and wholesale whole-bird prices are

expected to decline 2-3 percent.

U.S. turkey exports in 2001 were 487 million pounds,

up 9 percent over 2000. Exports accounted for about 9

percent of total production (fig. 5). The increase in

exports came mostly from higher shipments to Russia,

Poland, and countries of the former Soviet Union,

which offset a slowdown in exports to Mexico, the

largest market. Exports to these countries consist

mostly of Mechanically Deboned Meat (MDM) that is

used for sausage production. U.S. turkey exports to

Mexico declined by 6 percent to 220 million pounds in

2001 due to the slowdown of the Mexican economy.

Mexico imports mostly MDM and fresh and chilled

turkey parts, which are used to produce sausages and

cold meats. 

Russia is the second largest market for U.S. turkey

exports, totaling 80.8 million pounds in 2001, an

increase of 54 percent over 2000. U.S. turkey exports are

expected to be flat in 2002 as lower exports to Russia are

offset by increases to Mexico and other countries.

Egg Production Expected Flat and

Exports Forecast To Decline in 2002

Total U.S. egg production in 2001, table and hatching,

totaled nearly 7.2 billion dozen, nearly 2 percent more

than 2000. Egg production is expected to increase by

less than 1 percent in 2002 (fig. 1). Table eggs

accounted for 85 percent of total production in 2001,

and are expected to maintain the same proportion in

2002. Hatching egg production has increased more

slowly than broiler meat production due to gains in

hatchability and higher average slaughter bird weight.

Wholesale table egg prices averaged 67.2 cents a

dozen in 2001, down nearly 3 percent from 2000.

However, retail egg prices increased by 1.6 percent,

widening the wholesale-to-retail spread by 14 percent

(fig. 9). Retail egg prices had declined in each of the

previous 4 years. The wholesale egg market is a thin

market with a short-shelf life product, making it very

sensitive to changes in supply. 

Per capita egg consumption in 2001 rose slightly to

252.6 eggs, partly due to increasing demand for breakEconomic Research Service, USDA 11

Russia is a key customer for U.S. agricultural

exports, especially meats. But the institutions

inherited from the Soviet Union make it a relatively high-cost and risky country in which to do business. Western exporters operating in Russia face

substantial costs in transporting meat between

ports and provincial regions, in obtaining information about agricultural markets, and in enforcing

contracts. Unreformed institutions have so far

withstood most attempts to alter them. For more

information, see Institutional Reform in Russia:

What Are the Prospects? by Stefan Osborne

(http://www.ers.usda.gov/publications/AgOutlook/

Mar2001/AO279D.pdf).

Institutional Reform in Russia:

What Are the Prospects?
ing eggs by the commercial baking, confections, and

fast food industries. Wholesale table egg prices in

2002 are expected to decline 3-4 percent due to a larger supply of eggs and declining exports.

U.S. egg exports in 2001 were 190 million dozen, up

11 percent and nearly 3 percent of total U.S. egg production (fig. 5). Shell eggs (for human consumption

and hatching) accounted for almost half of total U.S.

exports. Canada, Japan, Belgium, Hong Kong, and

Mexico were the largest export markets, receiving

nearly three-quarters of U.S. egg exports. The huge

increase in exports to Belgium (due to a shortfall in

European production) offset a 30-percent decline in

exports to Japan and Mexico. U.S. egg exports in 2002

are expected to decline nearly 14 percent due to higher

Mexican egg production and a slowdown in the

Mexican economy. In addition, egg production in the

EU is recovering.

12 Economic Research Service, USDA

For more information on the poultry industry, contact

David Harvey, 202-694-5177, djharvey@ers.usda.gov.

For information on eggs, contact Fawzi Taha, 202-694-

5178, ftaha@ers.usda.gov.
Mandatory Price Reporting for

Livestock Industry

Livestock packers and importers whose operations

exceed certain levels must now report frequent and

detailed information to USDA on the price, quantity,

and characteristics of livestock they buy and sell. The

purpose of USDA’s Mandatory Price Reporting system

is twofold: to provide all livestock producers with

timely market information for operating in a changing

marketing environment, while meeting consumer

demand for meat and meat products. For more information, see Mandatory Price Reporting for Livestock

Industry by Mildred Haley (http://www.ers.usda.gov/

publications/AgOutlook/sep2001/ao284c.pdf).

In fall 2002, the ERS plans to begin publishing data on

retail meat-cut prices and sales based on scanner data

purchased from vendors.

Animal Diseases and Livestock Drugs

Two animal diseases affected European agriculture in

2001. Foot-and-mouth disease (FMD) and bovine

spongiform encephalopathy (BSE or “mad cow disease”) have made headlines throughout the world.

Both diseases affect livestock product prices, availability of goods, and costs of production. Trade is also

affected as governments restrict imports from infected

countries. Additional information can be found in

Dissecting the Challenges of Mad Cow & Foot-andMouth Disease by K. Mathews and J. Buzby

(http://www.ers.usda.gov/publications/AgOutlook/aug2

001/AO283c.pdf).

Use of antimicrobial drugs (antibiotics and others) in

livestock production has been surrounded by controversy

since the practice began in the 1940s. At high levels, the

drugs are used to cure or contain livestock diseases. At

low levels, they are used to enhance feed efficiency and

promote growth, fight infections not easily detectable

without clinical examination, and prevent diseases. It is

primarily the low-level use of these drugs—particularly

for promotion of growth—that raises concerns about

their role in the emergence of drug-resistant bacteria. 

For further information, see Livestock Drugs: More

Questions Than Answers? by K. Mathews

(http://www.ers.usda.gov/publications/AgOutlook/

sep2001/ao284g.pdf).

Feeding low levels of antimicrobial drugs to livestock

can affect food safety, human health, and livestock

production costs and returns. The economics of

antimicrobial resistance in livestock and the economic

implications of banning the use of growth-enhancing

antimicrobial drugs are explored in Antimicrobial

Drug Use and Veterinary Costs in U.S. Livestock

Production by K. Mathews (http://www.ers.usda.gov/

publications/aib766/).

Characteristics and Production 

Costs of U.S. Cow-Calf Operations

Differences in regional conditions are the chief influence on variations in cow-calf production costs across

the United States. Cow-calf operators in the West and

Southern Plains have significant cost advantages over

operators in other regions because, with a longer grazing season, their herds require less supplemental forage during the winter. The larger acreages of operations in the West and Southern Plains also can support

more cows and enable economies of scale (spreading

the fixed investment over more units of production).

Because of the harsher climate, operations in the North

Central region and Northern Plains spend significantly

more to maintain their herds. For more information,

see Characteristics and Production Costs of U.S. 

Cow-Calf Operations by Sara D. Short

(http://www.ers.usda.gov/publications/sb974-3/).

Additional information about beef cow replacement

decisions can be found in The Beef Cow Replacement

Decision by K. Mathews and Sara D. Short (Journal of

Agribusiness 19,2(Fall 2001):191-211).

Confined Animal Production and

Manure Nutrients

Census of Agriculture data were used to estimate

manure nutrient production and the capacity of cropland and pastureland to assimilate nutrients. Most

farms have adequate land on which it is physically feasible to apply the manure produced onfarm at agronomic rates. Even so, manure that is produced on

operations that cannot fully apply it to their own land

at agronomic rates accounts for 60 percent of the

Nation’s manure nitrogen and 70 percent of the

manure phosphorus. In these cases, most counties with

farms that produce “excess” nutrients have adequate

Economic Research Service, USDA 13

Selected Readings
crop acres not associated with animal operations, but

within the county, on which it is feasible to spread the

manure at agronomic rates. For additional information,

see Confined Animal Production and Manure

Nutrients by Gollehon et al.

(http://www.ers.usda.gov/publications/aib771/).

Changing Structure of Global Food

Consumption and Trade

Higher incomes, urbanization, demographic shifts,

improved transportation, and consumer perceptions

regarding quality and safety are changing global food

consumption patterns. Shifts in food consumption have

led to increased trade and changes in the composition

of world agricultural trade. Given different diets, food

expenditure and food budget responses to income and

price changes vary between developing and developed

countries. In developing countries, higher income

results in increased demand for meat products, often

leading to increased imports of livestock feed. For further information, see Changing Structure of Global

Food Consumption and Trade by A. Regmi et al.

(http://www.ers.usda.gov/publications/wrs011//).

14 Economic Research Service, USDA